{
  "title": "Global Commodity Inflation Pass-through: Vulnerability of Small Island Developing States",
  "publication": "IMF Working Papers, July 4, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2025/07/03/global-commodity-inflation-pass-through-vulnerability-of-small-island-developing-states-568257",
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  "summary": "We examine the vulnerability of inflation in Small Island Developing States (SIDS) to global food and fuel inflation changes, drawing on a large panel of 168 countries, including 31 SIDS.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Study examines vulnerability of inflation in Small Island Developing States (SIDS) to global food and fuel inflation changes using a panel of 168 countries, including 31 SIDS.\n- Empirical approach: local projections methodology of Jordà (2005)."
    },
    {
      "heading": "Key findings",
      "content": "- Inflation in SIDS is nearly twice as responsive to international food commodity inflation shocks as in non-SIDS counterparts.\n- Evidence of asymmetry in food inflation pass-through: food-inflation increases have larger pass-through than equivalently sized food-inflation decreases.\n- For shocks to international crude oil inflation, the disparity between SIDS and non-SIDS is less apparent.\n- Results hold even when including country-specific fixed-effects and other control variables, most notably the weight of food and oil in a country’s CPI basket."
    },
    {
      "heading": "Robustness and controls",
      "content": "- Findings are robust to inclusion of:\n  - country-specific fixed-effects\n  - control variables, including the weight of food and oil in a country’s CPI basket"
    },
    {
      "heading": "Interpretation and mechanisms",
      "content": "- Results can be interpreted as indicating that the following factors impact food-inflation pass-through in SIDS:\n  - market structures\n  - dependence on imports\n  - the health of supply chains"
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Priority areas for policymakers in SIDS should include:\n  - addressing market structures that amplify external food price shocks\n  - reducing vulnerability from heavy dependence on imports\n  - strengthening supply-chain resilience to limit food-inflation pass-through\n\nLaron Alleyne and Patrick Blagrave, \"Global Commodity Inflation Pass-through: Vulnerability of Small Island Developing States\", IMF Working Paper No. 2025/138, July 4, 2025.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2025/07/03/global-commodity-inflation-pass-through-vulnerability-of-small-island-developing-states-568257"
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    "Authors: Laron Alleyne, Patrick Blagrave",
    "Published: July 4, 2025",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229016148.001",
    "Study examines vulnerability of inflation in Small Island Developing States (SIDS) to global food and fuel inflation changes using a panel of 168 countries, including 31 SIDS.",
    "Empirical approach: local projections methodology of Jordà (2005).",
    "Inflation in SIDS is nearly twice as responsive to international food commodity inflation shocks as in non-SIDS counterparts.",
    "Evidence of asymmetry in food inflation pass-through: food-inflation increases have larger pass-through than equivalently sized food-inflation decreases.",
    "For shocks to international crude oil inflation, the disparity between SIDS and non-SIDS is less apparent.",
    "Results hold even when including country-specific fixed-effects and other control variables, most notably the weight of food and oil in a country’s CPI basket.",
    "Findings are robust to inclusion of:",
    "Results can be interpreted as indicating that the following factors impact food-inflation pass-through in SIDS:",
    "Priority areas for policymakers in SIDS should include:",
    "**Working Paper**"
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